Crash and burn: US auto sales record slowest pace in a decade
That the global automobile industry possibly faces its biggest threat currently was suspected for some time. Had evidence came on Thursday when US media reported that the country's auto sales had stuttered to its slowest pace in a decade.
And the alarm bells are ringing loud.
The coronavirus pandemic has slammed the brakes on the global economy and the automobile industry the world over is feeling the pinch. A massive market, the US automobile industry potentially stands at the cusp of a crash and a crisis with sales spiraling in the month of May. The country has recorded over 6,000 coronavirus-related deaths at the time of filing this report and many states have issued lockdown orders. Demand for new cars, therefore and quite obviously, fallen through the cracks.
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Bloomberg has reported that sales fell 7.1% for GM and more than 10% for Fiat Chrysler in the first three months of 2020. March has been particularly unforgiving with companies like Volkswagen, Honda, Hyundai and Mazda seeing a fall of 40% in sales in the month. Ford, a major American force, has seen sales dive 21% in March and 13% in the first three months of the year. Little wonder then that share prices of some of the biggest automobile companies too have come down significantly.
For a year that promised to be positive for automakers in the US, 2020 has been anything but. Plants are firmly shut with several companies planning to keep production suspended till at least mid-April. One of the biggest reasons for this is that demand has come down to such a level that they fear inventories swelling up beyond control.
The morbid nature of challenges is not limited to the US as several car makers in several other countries also remain in a state of stunned comatose. Almost every single car and two-wheeler maker in India, for instance, reported massive dip in sales figures for March as the entire country was put in a three-week long lockdown till April 14.
In Germany, home to giants like VW, Mercedes-Benz, BMW and Audi, top officials of the car industry made a crisis call to Chancellor Angela Merkel to discuss ways of tackling the prevailing situation.
China, the world's largest automobile market, had locked down provinces most affected by coronavirus - many of these were also where auto companies had their factories. It is only now that these factories are stuttering back to life even as production and supply lines remain under extreme stress.
Experts mostly agree that the remainder of 2020 will remain a year of rebuilding for the global automotive industry. Some even predict that the push towards electric mobility will suffer significantly as investments could be re-planned.
(With agency inputs)